The Denver record company Vinyl Me, Please has ousted its top executives and sued them for allegedly funneling company funds to their pricy pet project in RiNo.
Vinyl Me, Please was founded in 2012 and has become a popular record-of-the-month subscription service in the dozen years since, with 20,000 subscribers today, it said. CEO Cameron Schaefer and Chief Financial Officer Adam Block led the company in recent years.
But the company’s board fired them, along with Chief Strategy Officer Rich Kylberg, in March. And on Wednesday, all three were sued by the company they led.
The stated cause for their ouster is a new 14,000-square-foot vinyl record production plant at 4201 N. Brighton Blvd. That plant, which started pressing records this year, has been hyped by national andlocal media, as well as Schaefer, Block and Kylberg,since 2022.
“It’s purely because we love Denver,”Schaefer saidthat year of the decision to press records in RiNo. “People might laugh at that, but it’s really true. We definitely had people pushing us like, ‘There are cheaper places you could build this.’ But that wouldn’t be as fun.”
Behind the closed doors of Vinyl Me, Please, the plant is not seen as such a fun success.
“To date, the pressing plant has not demonstrated the ability to press vinyl records in a timely or professional manner,” according to the company’s lawsuit in Denver District Court.
In 2020, as the pandemic pinched global supply chains, VMP’s suppliers placed limits on the number of vinyl records it could buy. That’s when Schaefer, Block and Kylberg “seized on the order cap and the fear of possible further disruptions in VMP’s supply chain as an opportunity that they could exploit for their personal benefit,” the company says now.
The three executives decided to start a vinyl pressing plant that would supply records to Vinyl Me, Please directly. They came before VMP’s board with a proposal in late 2021.
In VMP’s recollection, the plan was for the factory to be independently owned and independently funded, save for some minor expenditures and VMP staff time. The seven-person board was divided, 4-3, with Schaeffer casting the deciding aye vote, the company said.
Vinyl Me, Please accuses Schaefer, Block and Kylberg of violating that plan before it was even approved, by spending $200,000 in company funds on equipment for the plant in mid-2021. They had also spent hundreds of company hours on the plant by then, VMP alleged.
And when it came time to hire a manager for the plant, it was VMP that paid the “substantial salary, benefits and bonuses” of industry veteran Gary Salstrom, the lawsuit alleges.5280 magazine reportedlast year that Salstrom was made an equity partner in VMP.
“Defendants did not disclose to the board that they had directed hundreds of thousands of dollars of VMP money to pay the salary and bonuses for a VMP employee that worked almost exclusively for the pressing plant,” the lawsuit said Schaefer, Block and Kylberg.
Before long, Vinyl Me, Please’s top executives were spending a majority of their time on what was supposed to be an independent side project, and convincing other VMP employees to do the same, according to the company. “As a direct result of defendants’ devotion” to the plant, “VMP’s operating results declined throughout 2023 and into 2024,” it alleged.
Meanwhile, outside funding for the factory fell through, so VMP’s executives spent hundreds of thousands of dollars of company funds on equipment for it, “including a specialized sound system that was not necessary…but was rather an amenity,” VMP said. They allegedly spent hundreds of thousands of dollars on leases too, and hid that from the board.
In March 2022, two years before the factory was functional, VMP’s executives signed an agreement that made VMP a customer of the plant, at an upfront cost of $1.5 million, the lawsuit alleged. They also sent out marketing materials “implying the two entities” — VMP and the factory — “were one and the same, creating confusion amongst customers,” VMP said.
“When, by late 2023, the pressing plant was still not able to press records or fulfill orders, the board began to investigate the relationship and business dealings between the pressing plant and VMP,” according to the lawsuit. Schaefer, Block and Kylberg “did not provide a candid or truthful accounting or explanation to the board,” so they were fired in March.
Vinyl Me, Please is suing the trio of ex-execs for breaching their fiduciary duty to the company. Its lawyers are Chad Nitta and Shelby Morbach in the Denver office of Kutak Rock. The company and its attorneys did not respond to interview requests this week.
Emails and phone calls to the listed numbers of Schaefer and Kylberg were not answered or returned this week either. Contact information for Block was not available.
VMP co-founder Matt Fiedler became interim CEO of the company last month, according to his LinkedIn profile, which states he was previously CEO from 2012 to 2020.
The company’s subscriptions run $46 a month or $435 a year, according to its website.
